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Thursday, June 25, 2009 10:20:54 PM
The Next Million-Dollar Penny Stock
By Tim Beyers
June 15, 2009 | Comments (0)
Recs
5 Penny stocks can make you rich. Need proof? Every one of these multibaggers was once a penny stock:
Company
Recent Price
CAPS Rating
(out of five)
5-Year Return
American Oriental Bioengineering (NYSE: AOB)
$4.96
*****
110%
LMI Aerospace (Nasdaq: LMIA)
$10.48
****
759%
GeoResources (Nasdaq: GEOI)
$10.67
****
465%
American Dairy (NYSE: ADY)
$42.30
***
1,310%
Green Mountain Coffee Roasters (Nasdaq: GMCR)
$60.43
*
1,296%
Sources: Motley Fool CAPS, Yahoo! Finance.
The promise of outrageous returns has periodically made even the world's best stock pickers penny stock investors. Peter Lynch has enjoyed the stock market's super-cheap seats in the past, and still does on occasion. The Royce Low-Priced Stock fund has beaten the market for a decade by betting on stocks trading near or below $10 a share, including TradeStation (Nasdaq: TRAD).
Even the All-Stars in our 135,000-plus Motley Fool CAPS community take to penny stocks. More than a few have been richly rewarded.
Pennies from heaven
So why not invest in penny stocks? Well, the warning the SEC issued about them provides one excellent reason to steer clear. But what if we take the agency's definition literally, and limit our choices to stocks trading between $1.50 and $5 a share? And what if we further seek only four- and five-star stocks with a market cap between $250 million and $2 billion? Surely our CAPS screener would return some winners, right?
When I ran that screen this week, 51 stocks made the cut -- not including our last topper, Orthovita.
My favorite penny stock this week is Northgate Minerals (AMEX: NXG), a copper and gold miner that our CAPS community mostly loves:
Metric
Northgate Minerals
CAPS rating (out of five)
****
Total ratings
1,442
Percent Bulls
96.8%
Percent Bears
3.2%
Bullish pitches
213 out of 215
Data current as of June 15, 2009.
Bullish investors find Northgate's valuation most enticing. As CAPS All-Star goldminingXpert wrote in a pitch last month:
Reloading at 20% cheaper than my last pick as it outperformed the S&P but still declined. This stock is worth $4 to $7 if you value it on the same metrics as other mid-tier gold producers are valued with. I own this stock -- have owned it since I first purchased at $3 and tripled down at $0.98.
Analysts would appear to agree. Northgate trades for 14 times forward earnings, a fraction of the 46% average annual income growth the Street expects this company to achieve over the next five years. Color me intrigued.
But that's just my opinion -- I'm more interested to know what you think. Would you buy Northgate Minerals at today's prices? Let us know by signing up for CAPS today. It's 100% free to participate.
Recent NXG News
- Form EFFECT - Notice of Effectiveness • Edgar (US Regulatory) • 06/11/2024 04:16:00 AM
- NXG NextGen Infrastructure Income Fund (NYSE: NXG) Announces Terms of Rights Offering and Change to Record Date of July Distribution • PR Newswire (US) • 06/10/2024 08:28:00 PM
- Form N-2/A - Registration statement for closed-end investment companies: [Amend] • Edgar (US Regulatory) • 06/06/2024 08:26:19 PM
- NXG NextGen Infrastructure Income Fund (NYSE: NXG) Announces Distributions • PR Newswire (US) • 06/03/2024 01:45:00 PM
- Form N-2/A - Registration statement for closed-end investment companies: [Amend] • Edgar (US Regulatory) • 05/13/2024 08:57:12 PM
- Form DEFR14A - Revised definitive proxy soliciting materials • Edgar (US Regulatory) • 05/08/2024 01:50:12 AM
- Form N-2 - Registration statement for closed-end investment companies • Edgar (US Regulatory) • 03/06/2024 06:15:36 PM
- Form N-CSR - Certified Shareholder Report • Edgar (US Regulatory) • 02/08/2024 10:28:40 PM
- NXG NextGen Infrastructure Income Fund (NYSE: NXG) Announces Distributions • PR Newswire (US) • 02/01/2024 02:45:00 PM
- NXG NextGen Infrastructure Income Fund (NYSE: NXG) Announces Distributions • PR Newswire (US) • 12/05/2023 12:41:00 AM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 11/08/2023 09:07:03 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 11/08/2023 09:06:08 PM
- Form NPORT-P - Monthly Portfolio Investments Report on Form N-PORT (Public) • Edgar (US Regulatory) • 10/26/2023 09:29:22 PM
- NXG Cushing® Midstream Energy Fund and NXG NextGen Infrastructure Income Fund Announce Officer and Portfolio Manager Changes • PR Newswire (US) • 10/09/2023 08:24:00 PM
- Form N-CSR/A - Certified Shareholder Report: [Amend] • Edgar (US Regulatory) • 10/05/2023 09:29:23 PM
- NXG NexGen Infrastructure Income Fund (NYSE: NXG) Increases Monthly Distribution 100% • PR Newswire (US) • 09/01/2023 01:45:00 PM
- Form N-PX - Annual Report of proxy voting record of management investment companies • Edgar (US Regulatory) • 08/24/2023 07:33:50 PM
- Form N-CSRS - Certified Shareholder Report, Semi-Annual • Edgar (US Regulatory) • 08/07/2023 06:27:08 PM
Glidelogic Corp. Becomes TikTok Shop Partner, Opening a New Chapter in E-commerce Services • GDLG • Jul 5, 2024 7:09 AM
Freedom Holdings Corporate Update; Announces Management Has Signed Letter of Intent • FHLD • Jul 3, 2024 9:00 AM
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Mass Megawatts Announces $220,500 Debt Cancellation Agreement to Improve Financing and Sales of a New Product to be Announced on July 11 • MMMW • Jun 28, 2024 7:30 AM